Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.

Tyny mid year june 2018 spreads

481 visualizaciones

Publicado el

2018 ad investment forecasts and released its initial 2019 outlook. GroupM believes there will be $24B in net new GroupM advertising investment this year, the best annual increment since the bounce back from the global recession in 2010 when $26B was added to investment.

Publicado en: Datos y análisis
  • Sé el primero en comentar

  • Sé el primero en recomendar esto

Tyny mid year june 2018 spreads

  1. 1. WORLDWIDE MEDIA AND MARKETING FORECASTS This Year Next Year June 2018
  2. 2. GroupM 498 7th Avenue New York, NY 10018 U.S. FOR THE FULL 70-COUNTRY FORECAST AND APPENDIX : ALL WPP EMPLOYEES: link to inside.wpp.com/marketing GROUPM CLIENTS: please speak with your client account director for the full data file or contact Adam Smith (adam.smith@groupm.com) EVERYONE ELSE: link to our sales portal groupmpublications.com or contact Adam Smith (adam.smith@groupm.com) WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 This Year Next Year All rights reserved. This publication is protected by copyright. No part of it may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying or otherwise, without written permission from the copyright owners. Every effort has been made to ensure the accuracy of the contents, but the publishers and copyright owners cannot accept liability in respect of errors or omissions. Readers will appreciate that the data is as up-to-date only to the extent that its availability, compilation and printed schedules will allow and are subject to change. 3 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018
  3. 3. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . 6 BRAZIL . . . . . . . . . . . . . . . . . . . . . . . . . 12 CANADA . . . . . . . . . . . . . . . . . . . . . . . . 16 CHINA . . . . . . . . . . . . . . . . . . . . . . . . . . 20 GERMANY . . . . . . . . . . . . . . . . . . . . . . . 24 INDIA . . . . . . . . . . . . . . . . . . . . . . . . . . 28 RUSSIA . . . . . . . . . . . . . . . . . . . . . . . . . 32 UNITED KINGDOM . . . . . . . . . . . . . . . . . . . 36 UNITED STATES . . . . . . . . . . . . . . . . . . . . 40 CONTENTS 5 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018
  4. 4. THIS YEAR NEXT YEAR 6 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 7 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 Introduction 2017 advertising investment growth came in at 3.5%, ahead of our 3.1% December forecast. Our headline 4.5% for 2018 is fractionally raised, and we make a first prediction for 2019 of 3.9%. The outlook for the global economy remains on balance benign, qualified by some permutation of protectionism, equity correction, excessive debt, dollar appreciation and higher inflation. We use the IMF World Economic Outlook, which in April upgraded its aggregate nominal GDP forecast for our country set for 2018 from 5.6% to 6.1%, and for 2019 from 5.6% to 5.9%. Its picture of the global economy and ours of ad investment both therefore depict a shallow peak in 2018. Strong growth increases demand for commodities, capital and labor. Led by oil, HSBC’s commodity index recorded an overall gain of 10% in January–April. HSBC has real worldwide investment growth moderate but stable at 6.6% in 2018 and again in 2019, and real wage growth of 4.5% and 4.4%, respectively. Whenever the end arrives, this will have been a slow-growth recovery. Low inflation has robbed advertisers of pricing power and diverted brand investment into performance. Despite high employment, wage growth worldwide remains moderate. Global consumer price inflation last peaked at 5.1% as long ago as 2011 and has remained around 3% since 2014. The IMF predicts no breakout in the five years it forecasts. The main change in these forecasts is to raise digital’s share of ad investment and lower traditional TV’s. The line between these two media types grows ever less distinct, so the caveat bears repeating that nearly everywhere, “digital” includes ad revenue flowing to the IP- delivered services of broadcast TV brands. This amount is rarely itemized, but surely growing. Our digital share for 2018 rises from 36% in our December forecast to 39% this time. This is the combined effect of upward revisions in the USA, Asia-Pacific, and the MENA region. At 39% for 2018, worldwide digital eclipses TV at 37% for the first time. In 2019 we have the gap growing to 41% versus 36%. But it is not really “versus”: the two media are symbiotic. Media summary 2011 2012 2013 2014 2015 2016 2017 2018f 2019f North America 165,039 171,331 176,488 181,523 185,613 194,453 198,184 205,617 210,706 YOY% 3.2 3.8 3.0 2.9 2.3 4.8 1.9 3.8 2.5 Latin America 20,790 22,392 26,391 28,117 29,956 26,988 28,551 29,822 30,722 YOY% 11.3 7.7 17.9 6.5 6.5 -9.9 5.8 4.5 3.0 Western Europe 97,497 94,466 93,220 95,797 98,770 102,084 105,095 107,805 110,750 YOY% 1.2 -3.1 -1.3 2.8 3.1 3.4 2.9 2.6 2.7 Central & Eastern Europe 11,418 12,025 12,445 12,764 12,828 13,979 15,462 16,855 18,040 YOY% 9.6 5.3 3.5 2.6 0.5 9.0 10.6 9.0 7.0 Asia-Pacific (all) 130,959 141,077 150,870 159,764 169,400 178,978 187,915 199,195 210,963 YOY% 8.4 7.7 6.9 5.9 6.0 5.7 5.0 6.0 5.9 North Asia 67,344 74,525 81,331 86,773 92,592 98,169 103,800 110,485 117,303 YOY% 15.5 10.7 9.1 6.7 6.7 6.0 5.7 6.4 6.2 Asean 9,609 10,630 11,724 12,437 13,783 14,718 15,659 17,221 18,830 YOY% 10.0 10.6 10.3 6.1 10.8 6.8 6.4 10.0 9.3 Middle East & Africa 8,326 9,234 9,535 8,414 8,616 7,147 6,522 6,776 6,986 YOY% 10.6 10.9 3.3 -11.8 2.4 -17.0 -8.7 3.9 3.1 World 434,029 450,525 468,950 486,379 505,184 523,630 541,728 566,069 588,167 YOY% 4.9 3.8 4.1 3.7 3.9 3.7 3.5 4.5 3.9 Digital ad revenue is reported either as a whole, or by type (principally display and search), but never discriminates between large and small media owners or the long and short tail or between agency and non-agency bought. One can raise the same objection for all media reporting, but digital is unique in its long tail and in being dominated by global vendors. “One size fits all” is not much of a manifesto for the largest single medium and source of nearly all growth. Another is limit is categorization (Auto, Food etc.). Digital is mostly walled gardens. In consequence, a country is doing well to have 20% of its digital ad investment categorized. Large advertisers’ appetite for this information will grow as digital does, but it may be wiser for them to prioritize their users, brands and discovering their own actionable truths rather than worrying about share of voice. We predicted traditional TV would be almost flat in 2017. It fell 1%, but we think it will accelerate to 2% in the sports-assisted “mini- quadrennial” of 2018. Its young audience, never abundant, is growing scarcer on the main screen. Several countries report double-digit CPM inflation for these audience groups, but this rarely seems to translate into absolute revenue or share growth. Other ambiguities are that oligopolistic TV markets can still be lethally competitive, TV growth can be present without conspicuous CPG support, and TV share does not correlate with TV growth. Digital grew 15% in 2017 compared to the 12% we forecast. We expect some error given our limited exposure to digital’s big host of small advertisers, but among the larger advertisers we do see, we probably underestimated the “Facebook surge”, which in our estimation helped double the Facebook companies’ share of their addressable market in 2016–2017. Digital price inflation also played its part. Programmatic does not necessarily mean cheaper, especially when there is enhanced emphasis on, say, the bottom of funnel, or on safer or more viewable inventory. Going programmatic-first also excludes inventory that does not comply with standards required for automation. North America Western Europe Latin America Central & Eastern Europe Asia-Pacific (all) North Asia Asean Middle East & Africa 103,800 110,485 2017 2018f 2019f 198,184 210,706 205,617 30,722 29,822 28,551 15,462 107,805 110,750 105,095 187,915 199,195 210,963 18,040 16,855 117,303 15,659 17,221 6,522 6,776 6,986 18,830 198,184 103,800 17,22128,551
  5. 5. THIS YEAR NEXT YEAR 8 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 9 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 growth. China remains number two, with 6.8% ad growth: ‘the fifth successive year of its single-digit “new normal.”’ Our modelled further-out forecast has this rate easing to 5% in 2023. China’s $6 billion growth in 2018 still exceeds all-Europe’s $4 billion. India remains hopeful of double-digit growth in 2018 and 2019, with caveats around commodity price rises and trade obstacles. India’s prospective dollar growth this year is of the same order as Russia’s and Brazil’s combined. The Philippines enters our table as the last of the billion-dollar contributors. It is by far the largest of the ASEAN ad economies, with forecast per-capita ad investment of $60 this year, double the regional average. The world average is $93. The Philippines is undercounted, as digital is still not measured there. Digital accounts for 20% of ASEAN advertising investment where it is measured. The UK remains in the table against expectations of Brexit calamity and bouts of consumer fatigue, propelled by colossal digitization that will now reach 60% of recorded ad investment in 2019 on our numbers. Introduction(cont.) Introduction(cont.) Writing before GDPR’s arrival, commentary on the subject from our European correspondents in this sweep is sparse and ambivalent, illustrating the uncertainty in what seems likely to be more an evolution than an event. Seventy-six percent of Netherlands publishers predict minimal effect on revenues. Ireland thinks it will constrain 2018 investment but bounce in 2019. Austria expects impaired but still positive growth. Sweden expects turbulence and worries it will consolidate duopoly power. Poland sees a headwind to growth and advertisers seeking refuge in certain safer formats. We maintain our forecast that out-of-home will command 6.3% of worldwide ad investment in 2018, and now see this sustained in 2019. This is the highest share we have recorded since our series began in 1999. Digital OOH is the reason. As Australia observes, “combining location data with purchase, social media and viewing behaviour is a powerful opportunity for marketers”; we also note that this share growth is being achieved despite the large increase in supply that digitization creates. Upward revisions to out-of-home’s share could easily follow if the medium can automate faster, or if more advertisers seek safe, extensive reach. There is, alas, no change in print’s trajectory, with our forecast of the newspapers’ and magazines’ combined 2018 share revised from 14% to 13%, with 12% forecast for 2019. Five of our local offices spontaneously referred to media owner consolidation, a theme we should expect to recur. Like all traditional media, print ambitions generally converge on successful digitization and better measurement. They have a powerful message to substantiate: High-quality context is safe, it sells, and any premium more than pays for itself. When an advertiser defines its desired context properly, it should be crystal clear when print is required. Top contributors 2018 We predict 2018 will generate $24 billion in net new advertising investment, the best annual increment since the $26 billion bounceback in 2010. We think these six countries will provide 75% of the expected Top Contributors 2018 USDmm Consumption and investment Real global wage growth was 4% in 2017, and is accelerating slightly, possibly to a peak in 2018, but apparently not sufficient to push real consumer spending above its 3% trend, even in the tax-cut-assisted USA. Forecast 2018 wage growth polarizes at 7% in developing markets and 2% in the developed. The most vigorous are nearly all in Asia, with 2018 real consumer expenditure growth in China of 8%, India 7%, Indonesia 5%, Malaysia 6% and the Philippines 6%. Europe’s only member of this club is Turkey, at 6%. Worldwide investment spending grew a real 5% in 2017, with developed countries marking what may prove a top-of-cycle 4%, but China leading Asia-Pacific up from 6% last year to an expected 7% this year. Latin America has been running its investments down since 2014, but Argentina is leading a regional recovery forecast to reach 4% in 2018. Global commodities firming 10% in the year to April supports this, with hawkish US monetary and trade policy perhaps the main threats. 2016 Categories YOY% Change and USDmm 90,00060,00030,000 -4% -8% 12% 8% 4% 0% 16% -0.1%AVERAGE Retail Leisure Personal Care Auto Finance Food Communications Media Soft Drink Pharma 6,918 6,080 1,575 1,293 1,213 1,210 ChinaUSA PhilippinesJapan IndiaUK
  6. 6. THIS YEAR NEXT YEAR 10 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 11 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 Introduction(cont.) GroupM’s long-term forecast model has one principal independent variable: the IMF’s calculation of each country’s share of global GDP at PPP. This is intended merely for scenario planning. GDP forecasts know nothing of structural changes in media advertising, so neither can this model. Long-term ad forecasts 2019f 2020f 2021f 2022f 2023f North America 210,706 218,842 226,828 234,192 241,640 YOY% 2.5 3.9 3.6 3.2 3.2 Latin America 30,722 32,869 35,212 37,694 40,294 YOY% 3.0 7.0 7.1 7.0 6.9 Western Europe 110,750 113,742 117,484 120,344 122,947 YOY% 2.7 2.7 3.3 2.4 2.2 Central & Eastern Europe 18,040 19,182 20,345 21,574 22,838 YOY% 7.0 6.3 6.1 6.0 5.9 Asia-Pacific (all) 210,963 226,826 240,037 252,682 264,845 YOY% 5.9 7.5 5.8 5.3 4.8 North Asia 117,303 127,239 134,787 141,803 148,355 YOY% 6.2 8.5 5.9 5.2 4.6 Asean 18,830 21,246 23,411 25,627 27,864 YOY% 9.3 12.8 10.2 9.5 8.7 Middle East & Africa 6,986 7,276 7,597 7,939 8,291 YOY% 3.1 4.1 4.4 4.5 4.4 World 588,167 618,736 647,503 674,425 700,855 YOY% 3.9 5.2 4.6 4.2 3.9 Introduction(cont.) SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC 7 5 6 4 3 2 1 0 Consumer (old world) Advertising 2012 2013 2015 20172014 2016 2018f 2019f2011 Consumer (new world) Consumer spending YOY changes adjusted for inflation Investment YOY changes adjusted for inflation 16 18 20 14 10 12 4 6 8 0 2 2012 2013 2015 20172011 2014 2018f 2019f2016 Investment (old world) Advertising Investment (new world)
  7. 7. THIS YEAR NEXT YEAR 13 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 12 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 4.1 5.0 6.8 5.1 5.1 0.3 73.6 100 Media Total TV Radio Newspapers Magazines Cinema Internet Outdoor Political turbulence persists, and the expectation is the economy will only truly recover after the October 2018 presidential and general elections. 2018 brings the election and the World Cup. Given Russia is hosting this, we cannot expect such a bump as we had for Brazil in 2014. Our political uncertainty also constrains expectations for GDP. The IMF currently forecasts 6% nominal for 2018 and 7% for 2019. Our ad forecasts remain conservative and well below this. Online advertising investment in Brazil remains grossly underreported. It’s no news that media consumption has changed enormously in recent years. Brazil has lagged a bit, but now seems to be catching up. Internet reach for Gen Z and Millennials (both at 91%) now exceeds free-to-air TV consumption (both at 87%). At the same time, Google and Facebook have shown more commercial strength and more aggressive offers. In fact, Google is already the second largest media player in Brazil, behind the no-longer-almighty TV Globo. E-commerce stands at BRL 50 billion (USD 14 billion) and is growing at about twice the rate of the wider economy. In April it was reported Amazon was exploring with airline Azul a big expansion in direct-to-consumer delivery, presumably to augment or replace its present third-party arrangements. The e-commerce market is already hotly competed between Amazon and MercadoLibre. The rate of recovery should grow for a third successive year in 2018, even though the economy is the same size as it was in 2012 in real terms. Reform impetus seems to have slowed with the impending October presidential election, but the budget deficit has improved somewhat, from 8% last year to 5% predicted for 2018. Other positive indicators are consumer spending growth turning positive in 2017 and improving in 2018, real investment spending predicted to rise 5% in 2018 after four successive years of shrinking, a marked pickup in exports this year, and unemployment tracking back to single digits. Progress depends entirely on the strength and disposition of the next administration. Brazil Media BRLmm 2019f % Shares of media SOURCE: GROUPM SOURCE: GROUPM 4.0 4.5 6.2 6.2 5.5 0.4 73.3 100 Media Total TV Radio Newspapers Magazines Cinema Internet Outdoor TV Radio Newspapers Magazines Cinema Outdoor Internet 287 294 301 68,139MM 70,097MM 71,861MM 19,706MM 20,272MM 20,782MM Media Total USD MMBRL MM 2017 2018f 2019f 49,284 52,658 51,284 4,430 4,186 3,941 4,430 4,535 4,649 2,858 2,861 3,176 2,997 3,489 3,930 3,447 3,2543,8044,430 3,447
  8. 8. THIS YEAR NEXT YEAR 14 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 15 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 6.2 5.8 -9.9 2.7 4.1 -2.5-2.3 -0.1 2.42.4 12.6 -5.6 -9.4 16.4 2.9 2.5Media Total YOY% change TV Radio Newspapers Magazines OutdoorCinema Internet 2018f 2019f 30 20 10 0 -10 Investment Advertising 40 2012 2013 2014 20162011 2017 201920182015 ■ Categories: Ibope Monitor (after discounts) ■ Historic media revenue: Ibope Monitor ■ Internet comprises display and search but is undercounted. ■ Agency commission: in, typically 20% ■ Discounts: after (ca. 50% from rate card) ■ Newspaper classified: in ■ Internet classified: out ■ Ibope (Kantar) “Digital Display” covers only the ads served in the 100 desktop sites in its viewing rank, and does not monitor Google, Facebook, mobile, or automated buys targeting specific audiences. ■ “Digital Display” as reported is therefore a diminishing market. Brazil Brazil SOURCE: GROUPM SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC Consumer spending YOY changes adjusted for inflation YOY% Change Investment YOY changes adjusted for inflation 2017 Categories YOY% Change and BRLmm 40 30 20 0 10 -10 Consumer Advertising 2011 2012 2014 20152013 201920182016 2017 12,0009,0003,000 6,000 -40% -20% -30% -10% 10% 20% 0% 40% 30% 50% Media Cars, Parts & Accessories Pharma Culture, Leisure, Sport and Tourism Alcohol Apparel Telecoms Soft Drink Personal Care & Beauty Consumer Services Financial Market & Insurance Public and Social Services Retail Trade Food 0%AVERAGE
  9. 9. 17 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEARTHIS YEAR NEXT YEAR 16 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 52.5 21.5 4.2 0.4 2.4 10.9 8.0 100 Media Total TV Radio Newspapers Magazines Cinema Out-of-home (excl. stadia) Digital TV Radio Newspapers Magazines Cinema Out-of-home Digital 50 51 51 13,062MM 13,722MM 14,730MM 10,182MM 10,697MM 11,483MM Media Total USD MMCAD MM 2017 2018f 2019f 3,052 2,983 2,953 1,497 1,502 1,502 1,065 1,098 1,292 325 335 401 569 581 598 7,203 8,211 6,197 8,211 Canada Canada is an open economy, with trade volumes equivalent to nearly two-thirds of GDP. The state of the global economy is thus a big influence. Along with stronger business and consumer confidence, global trade and investment growth have picked up. Global trade is forecasted to reach 3.2% in 2018 according to the World Trade Organization, and the IMF predicts Canada’s nominal GDP to grow around 4% annually in our forecast period. Driven by digital, we have ad investment accelerating ahead of this for the first time since 2015. Television audiences continue to decline as more people switch to digital formats. Canadians are watching two hours less each week versus five years ago. Young millennials (18–24) are watching on average six hours less than five years ago. The result: Television inflation continues to increase because as audiences continue to decline, advertiser demand has not, causing a supply issue. Broadcasters are bringing forward much needed data-enhanced television offerings, but technical standardization across all available TV inventory is essential in order for it to succeed. Netflix remains the primary source for OTT TV content. More than half of anglophone households subscribe. Daily time spent with radio is projected to fall another 2.1% in 2018 to 90 minutes. The streaming service Spotify continues to grow and innovate, recently launching the self-service Ad Studio, allowing marketers to upload full audio scripts to be voiced by Spotify. Advertisers can target consumers based on music preferences in addition to age, sex and location. The average time spent per day with print is estimated to fall to just under 22 minutes in 2018, making it even more important for publishers to evolve their digital product. Digital ad spending is projected to hit CAD 7.2 billion in 2018 and will account for 43% of total media time spent (adults 18+). Mobile accounted for 28% of all media time in 2017 and grows every year. We expect mobile ad spending to reach CAD 5.3 billion in 2018, and claim a 74% share of total programmatic investments. We project video ad investment to rise 15% in 2018 and its programmatic element to grow even faster, at 20%. Search is the leading form of digital ad investment and should remain so in 2018. Google continues to dominate, but Amazon search launched in late 2017 and has started to build momentum in Canada. Social media usage in Canada is near capacity, with low single-digit growth rates expected each year through 2021. In 2018, the number of social network users in Canada will reach 21.8 million, or 59% of the population. 2017’s 3% real/5% nominal GDP growth was the highest in the G7, but this is likely to moderate as indebted households respond to tighter money and mortgage lending. We should expect consumer spending to track lower, but whether investment spending rises to offset this is another matter. Trade is equivalent to 64% of GDP, so Trump-style protectionism may weigh on investor sentiment. Net trade was a drag on the economy in 2017 and may remain so in 2018, but lower demand for imports and a longer-lived recovery in Asia would create conditions for trade to become a tailwind from 2019. 2019f % Shares of media Media CADmm SOURCE: GROUPM 55.7 20.2 4.1 0.3 2.2 10.2 7.2 100 Media Total TV Radio Newspapers Magazines Cinema Out-of-home (ex stadia) Digital SOURCE: GROUPM
  10. 10. THIS YEAR NEXT YEAR 18 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 19 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR Canada Canada Consumer spending YOY changes adjusted for inflation 7 4 6 5 2 3 -3 -2 -1 0 1 2011 2012 2014 20162013 2015 2017 20192018 Consumer Advertising Investment YOY changes adjusted for inflation 14 6 8 10 12 4 -6 -4 -2 0 2 2012 2013 2015 20172011 2014 2016 2018 2019 Investment Advertising -3.2 -3.0 -3.0 1.0 -0.3 -15.0 -16.4 2.0 3.02.0 14.0 16.2 5.1 7.3Media Total YOY% change TV Radio Newspapers Magazines Cinema Out-of-home Digital 2018f 2019f YOY% Change SOURCE: GROUPM ■ Categories & advertisers: Market Track – Ad Dynamics (includes TV, radio, newspapers, magazines and OOH, but not internet) ■ Historic media revenue: TV and radio, CRTC; newspapers, CAN; magazines, Magazines Canada; OOH, GroupM based on Nielsen/ Market Track; Digital, IAB. Others: GroupM ■ Agency commission: out ■ Discounts from rate card: after ■ Newspaper classified: in ■ Internet classified: in ■ Digital comprises display, classified, search, email and mobile, including advertising that appears on desktop and laptop computers as well as mobile phones, tablets and other internet-connected devices SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC
  11. 11. THIS YEAR NEXT YEAR 21 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 20 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 61.2 25.8 9.7 0.4 0.8 2.1 100 Media Total TV Radio Newspapers Magazines Internet Outdoor 65.3 23.1 9.4 0.3 0.5 1.4 100 Media Total TV Radio Newspapers Magazines Internet Out-of-home Total retail sales of consumer goods maintained double-digit growth of 10.2% in 2017, and China’s Consumer Confidence Index remained at a historical high of 114 in the second half, representing a six-point improvement relative to Q4 2016. Reform and structural management helped nominal GDP pick up from 6.7% in 2016 to 8.9% in 2017. The IMF’s raised expectation is for the economy to sustain this rate of growth for the forecast period. Given the positive macroeconomy outlook, we expect steady growth of media investment in the order of 6.8% in 2018 and 6.6% in 2019. Although the overall media market keeps growing, performance in different channels becomes further diversified. Internet advertising is still the major driver for growth, and is likely to surpass 60% of measured advertising investment in 2018. Growth is, however, levelling off in technical penetration and in audience, which we think will be reflected in the advertising growth trajectory, which we forecast at 14.4% in 2018 and 12.6% in 2019. Spending on TV-slot commercials will continue falling, but we forecast a small improvement in trend from the 8.6% fall in 2017 to -5.3% in 2018 and -5.5% in 2019. CCTV and PSTV (provincial satellite) channel groups are the key reasons for the improvement, arising from TV program innovation, product optimization and better marketing. The World Cup in Russia will lead a strong performance for CCTV channel groups. The situation of provincial and local TV is deteriorating for want of top resources. Continued urbanization, digitization and mass transportation create more opportunities to drive OOH advertising, for which we expect 9.3% and 9.0% growth in 2018 and 2019, respectively. With internet access and development of technologies including iBeacon, VR, AR and Wi-Fi, OOH has great potential to amplify its impact in the era of the Internet of Things and cross-screen integrated marketing. Advertisers appreciate the medium for its reach and salience in town and country alike. Internet companies use OOH to recruit a young audience, with “OOH+Social” proving a potent combination. Rising cinema admissions, exceeding RMB 10 billion for the first time in February, is another natural OOH accelerant. Spending on radio is expected to decline a following its recent assistance from rising penetration, particularly in-car. Withdrawal of tax incentives restricted car sales volume growth to a seven-year low of 1.4% in 2017, according to the China Association of Automobile Manufacturers. Therefore, our forecast on radio spending growth is -9.7% and -10.0% in 2018 and 2019, respectively. Traditional print media still endure shrinkage despite new media integration and business expansion. We forecast newspaper advertising investment at -36.0% in 2018 and -37.2% in 2019, and for magazines, respectively, -21.7% and -22.3%. China 2017 real GDP grew 6.9% according to the government, but using proxy indicators, UK analyst Capital Economics estimates the true rate to be about 5%, or about 6.5% nominal, which would correspond with our run-rate for advertising. Whatever the real figure may be, trends remain healthy, with growth persisting despite tighter credit controls, exports beating forecasts, inflation contained, and real consumer spending accelerating from 7% in 2017 to an expected 8% in 2018. Government consumption is trending down, offset by investment rising. Real wage growth is stable at between 7% and 8% annually. China absorbs nearly 10% of global imports. Its trade surplus was 1.4% of GDP in 2017 and forecast 1.6% in 2018, half the rate of the Eurozone’s. Both are in Trump’s unfair-trading crosshairs, from which most observers infer trouble, but the object of reasonable sanctions is to reward reasonable behavior. In China’s case, this might take the form of respecting IP, deregulating finance and service sectors and closing excess capacity in coal and steel – although China supplies only 1% of US steel imports. Media CNYmm SOURCE: GROUPM SOURCE: GROUPM TV Radio Newspapers Magazines Outdoor Internet 569,168MM 607,667MM 648,073MM 89,885MM 95,965MM 102,346MM Media Total USD MMCNY MM 2017 2018f 2019f 166,958 149,428 158,088 9,275 10,306 11,414 4,869 3,059 7,614 2,136 2,750 3,510 375,966 423,482 328,711 60,692 55,687 50,962 328,711 2019f % Shares of media
  12. 12. THIS YEAR NEXT YEAR 22 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 23 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 -21.7 -5.5-5.3 -10.0-9.7 -37.2-36.0 -22.3 9.0 12.6 14.4 9.3 6.8 6.6Media Total YOY% change TV Radio Newspapers Magazines Outdoor Internet 2018f 2019f China China ■ Categories: CTR (TV and print only) ■ Historic media revenue: TV, print, radio: CTR; internet: iResearch; OOH: Kinetic ■ “China” here means the People’s Republic of China and does not include Hong Kong or Macau ■ Agency commission: out ■ Discounts from rate card: after ■ Newspaper classified: in ■ Internet classified: in ■ Production cost: out ■ Internet is PC and mobile, and comprises search, e-commerce website, static display, video, rich media and others. SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC SOURCE: GROUPM Consumer spending YOY changes adjusted for inflation YOY% Change Investment YOY changes adjusted for inflation 2017 Categories YOY% Change and CNYbn 10 8 6 4 0 2 Consumer Advertising 12 2012 2013 2015 20172011 2014 2018 20192016 25 20 15 10 5 0 Investment Advertising 30 2012 2013 2015 20172011 2014 2018 20192016 200,000150,00050,000 100,000 -20% -10% 20% 10% 0% 40% 30% 50% Business & Services Leisure Alcohol Post & Communication Automobiles Toiletries Beverages Personal Items Pharma Foodstuff -3%AVERAGE Personal Items Leisure Automobiles Post & Communication Business Alcohol Communication & Services Business Alcohol & Services Beverages Foodstuff PharmaPharma
  13. 13. 25 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEARTHIS YEAR NEXT YEAR 24 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 TV Radio Newspapers Magazines Cinema Outdoor Internet 95 97 99 23 17,145MM 17,318MM 17,532MM 20,796MM 21,007MM 21,266MM Media Total USD MMEUR MM 2017 2018f 2019f 4,514 4,605 4,559 783783775 3,774 3,890 4,011 1,762 1,816 1,873 1,085 1,117 1,151 5,055 5,359 4,792 4,514 3,890 29.5 4.5 0.5 10.5 6.3 21.6 27.0 100 Media Total TV Radio Newspapers Magazines Cinema Outdoor Internet Germany Video is a growing and important component of digital advertising. Six-second Outstream and Shortstream ads are highly effective, and being integrated within user-friendly content, they do not have to find space in allocated video ad space, which is scarce. Mobile is growing too, but it is hard to quantify in isolation because it is mixed up in multiscreen and cross-device campaigns. Programmatic has surged in the last two years and is likely to keep growing. One challenge is, however, to minimize open market spend and maximize private deals. Social media continues to grow too, predominantly Facebook, but Google seems mature and search as a whole is actually declining a little. Brand safety and viewability is a big topic. Display ad investment growth has fallen slightly as advertisers prioritize brand-safe and user-friendly environments. Another big topic is GDPR and ePrivacy. The biggest challenge will be bringing all parties around one table and finding a joint and congruent solution. Though convenient, to rely on integrating or collaborating with Google may produce unintended consequences. TV still has the highest daily reach of adults 14+, of 81%, and remains the preferred medium for large audiences. However, slower growth and channel fragmentation fosters predatory competition between the TV stations. Our biggest concern is loss of under-40s’ reach: They are watching more video, but less TV. The TV publishers must therefore increase their digital video reach. Meanwhile, the supply problem is fueling 14–49 unit price inflation of around 10%. We predict absolute TV revenue growth of only 1% a year, however. There is welcome progress in audience measurement in the form of a new video panel to replace the TV one, with mobile included from 2018. Addressable TV is growing, but constrained by siloes and a lack of common standards. Magazine circulation and advertising is still pressurized, but three-quarters of circulation is still paid-for, much by subscription, which implies reader engagement and allows publishers to plan investment. There is a healthy pipeline of premium special interest launches. To have a clear position is to position for growth. Discussion continues about consolidation and cooperation in distribution, marketing and sales to keep the whole medium competitive. Newspapers’ trajectory has improved: The medium remains highly relevant for most retailers and discounters. Score Media Group (publisher of several German dailies) is still essential as the key marketer for national and regional newspapers. Digital audio advertising grows strongly above average, especially among the younger target group. An increase of 40% is predicted for 2018, propelling the subsector to about €49 million. Drivers include programmatic audio, high demand for podcasts, and the proliferation of devices such as smart speakers. Germany’s 2017 trade surplus was equivalent to 7.9% of GDP, by far the largest proportion of any major economy. There seems little domestic political pressure to change this, but external pressure may emerge in 2018 in the shape of President Trump. The main advantage to Germany of the status quo is high employment, but its keen savers keep spending growth stuck around the feeble Eurozone average. The economy grew 2.5% in real terms in 2017 (3.8% nominal), the fastest since 2011, but retail sales fell in six of the eight months to April 2018. Negative real interest rates have, however, made themselves felt in overheated property prices, up 50% since 2008 (compared to 15% in the US and 16% in the UK). The economy cannot grow much faster, and anecdotal evidence suggests 2018 may be a little slower, with employers having difficulty finding staff. Even if wages are forced up by shortages or the cost of housing, history gives little reason to suppose this will have much effect on Germany’s spending and saving trajectories. The composition of Chancellor Merkel’s hard-won coalition seems likely to reinforce these austere characteristics. Media EURmm SOURCE: GROUPM SOURCE: GROUPM 30.6 4.5 0.6 10.0 6.6 21.5 26.3 100 Media Total TV Radio Newspapers Magazines Cinema Out-of-home Internet 2019f % Shares of media
  14. 14. THIS YEAR NEXT YEAR 26 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 27 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 1.0 1.01.0 -3.0-3.0 -3.0-3.0 3.03.0 2.02.0 6.0 5.5 1.0 1.2Media Total YOY% change TV Radio Newspapers Magazines Cinema Outdoor Internet 2018f 2019f 4 6 8 2 0 -2 -4 Investment Advertising 2012 2013 2015 20172011 2014 2018 20192016 3 2 0 -1 1 -3 -2 2012 2013 2015 20172011 2014 2016 2018 2019 Consumer Advertising Germany Germany ■ Categories: Nielsen, gross ■ Historic media revenue: ZAW (except internet) ■ Historic internet revenue from 2004: OVK (On- line Marketing Circle) (gross, but discounted by GroupM) ■ Newspapers include advertising journals, weekly and Sunday newspapers, and supplement ■ Magazines include B2B but exclude directories ■ Agency commission: out ■ Discounts from rate card: after ■ Newspaper classified: in ■ Internet classified: out YOY% Change SOURCE: GROUPM SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC Consumer spending YOY changes adjusted for inflation Investment YOY changes adjusted for inflation 2017 Categories YOY% Change and EURmm Car Market Food IT & Telecoms Home & Garden Cosmetics & Toiletries Pharmacy Beverages Financial Services Retail & Mail Order Commercial Services Media 10,0008,0006,0004,0002,000 -20% -40% 40% 20% 0% 80% 60% 10%AVERAGE
  15. 15. THIS YEAR NEXT YEAR 28 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 29 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 4.6 1.2 0.6 26.2 45.5 17.9 100 Media Total TV Radio Newspapers Magazines Cinema Outdoor Internet 4.1 TV Radio Newspapers Magazines Cinema Outdoor Internet 6,718 8,062 10,077 23 612,630MM 693,469MM 791,645MM 9,190MM 10,403MM 11,876MM Media Total USD MMINR MM 2017 2018f 2019f 279,607 361,138 315,956 31,158 27,819 24,191 187,886 180,464 173,190 3,324 3,910 4,600 29,425 33,889 37,682 123,370 160,381 94,900 180,464 6,718 India India is expected to grow 7.4%–7.5% in 2019, driven mainly by services and private consumption; manufacturing will see modest growth and agriculture, nominal growth. Bank balance-sheet repairs and 2017’s sales tax reforms will truly start yielding results at some point in 2019, accelerating a reviving investment cycle. Identifiable downside risks might include protectionism, sanctions or geopolitics causing price inflation in primary resources. Auto advertising growth is expected to be high as car, scooter, luxury bike and commercial vehicle segments will see good sales growth in 2019, driven by urban demand and infrastructure investment. Rural demand for motorcycles will be monsoon-dependent. Banking, financial services and insurance ad investment will grow in tune with retail lending, the spread of insurance and banking, and demand for formal modes of investment. Digital payments are expected to reach USD 500 billion by 2020 and to overtake cash transactions by 2023. Consumer durables ad monies will see average to high growth. Stimulants include low penetration in consumer appliances, shorter replacement cycles in consumer electronics, robust replacement demand in general, and unexpected/extreme weather — hotter summers and hazier winters. E-commerce advertising will grow fast as the market matures: Morgan Stanley predicts the market to touch USD 200 billion by 2026 and about half of India’s internet users to mature by 2019/20 (five years or more of internet use). Online shoppers are expected to increase from the current 14% of internet users to 50% by 2026. Retail will sail smoothly: Strong consumer expenditure growth, slated at 12 %–14% year over year between 2017–2020, and the explosion of modern retail, expected to nearly double in size between 2016–19, will drive ad monies. FMCG ad spends will be modest given the prospect of higher raw material costs affecting margins, yet key drivers will remain strong: deeper rural penetration, rural demand supported by increased welfare spending in an election year, steady urban sales and growing interest in luxury and health- wellness products. Services ad growth will be strong as major segments travel and hospitality, health care and logistics are all expected to perform well in 2019, the travel market to touch USD 40 billion by 2020, and logistics to benefit substantially from GST. Telecom ad growth will be driven by mobile handsets — 2017 saw 288 million handset shipments (of which 124 million were smartphones). International Data Corp. expects 2018–20 to bring mid-teens growth rates. Advertising may, however, be constrained by intense competition weighing on margins throughout this period. For TV, sports and elections will drive advertising. Print will grow at a slower rate, losing share to digital; election spending will provide some relief. Radio is expected to do well, driven by local-focused categories retail, services and e-commerce. Cinema and outdoor will see good growth as technology adoption increases make them more ad-friendly. Digital will continue to see high double-digit growth backed by video (with OTT players/AVOD gaining traction) and other premium inventory. The IMF forecasts GDP growth of 7.4% real, 11.5% nominal for 2018, suggesting a return to trend after the disruption of GST and demonetization. Real investment growth tumbled from 10% in 2016 to 6% in 2017, however, and is forecast to remain at this inadequate level as banks repair their balance sheets over the next two years. Exports have also been a little impaired by the new tax regime, which has drained working capital and created a new bureaucracy for related reliefs. Wage growth figures are not available, but it has been sufficient to help sustain consumer spending growth at above 7% annually in real terms. Consumer credit has also surged. Rising prices for oil and other imports could push inflation above the central bank target of 4% this year, but so far has not prompted calls to raise the 6% base rate. Balance sheets will eventually be repaired, and reforms will yield efficiency benefits, which fuels optimism about growth beyond 2019. However, deeper economic reform of labour, land and state ownership must form part of any future of universal prosperity. Media INRmm SOURCE: GROUPM SOURCE: GROUPM 4.8 1.3 0.4 23.7 45.6 20.3 100 Media Total TV Radio Newspapers Magazines Cinema Out-of-home Digital 3.9 2019f % Shares of media
  16. 16. THIS YEAR NEXT YEAR 30 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 31 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 13.014.3 -15.0 -15.0 25.0 4.2 4.1 15.0 12.0 15.2 11.2 30.0 30.0 20.0 13.2 14.2Media Total YOY% change TV Radio Newspapers Magazines OutdoorCinema Internet 2018f 2019f 10 12 4 6 8 2 0 -2 -4 -6 Investment Advertising 14 2012 2013 2015 20172011 2014 2018 20192016 India India ■ Top categories data: TAM AdEx and GroupM ■ Top advertisers: TV, print, radio only ■ Historic media revenue: ORG-MAP; internet, GroupM ■ Print is display only (classified is not measured) ■ Excludes 15% agency commission ■ Internet comprises search, display, video and social; excludes small advertisers SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC SOURCE: GROUPM Consumer spending YOY changes adjusted for inflation YOY% Change Investment YOY changes adjusted for inflation 2017 Categories YOY% Change and INRmm 10 12 6 2 4 8 0 -2 -6 -4 Consumer Advertising 14 2012 2013 2015 20172011 2014 2018 20192016 E-Comm Auto FMCG TelecomServices Education BFSI Retail Real Estate Cons. Durables 200,00080,00040,000 120,000 160,000 -5% 5% 0% 15% 25% 20% 30% 10% 11%AVERAGE
  17. 17. THIS YEAR NEXT YEAR 32 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 33 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR Russia In 2017 the Russian media market showed substantial growth of nearly 15%, driven by strong demand in all digital segments, and TV, which still commands 40% of media advertising appropriations. In 2018 the trend for market growth is likely to remain in double digits from additional demand across all media segments due to presidential election campaigning in the first half, and the FIFA World Cup, hosted by Russia, in the second half. The wider economy is supportive to the extent of the stabilization of the ruble exchange rate, consumer inflation halving in 2016 and halving again in 2017 to under 4%, and the prospect of stable growth in nominal GDP of around 6% annually. The automotive market showed 22% period-on-period unit sales growth in the first quarter, supported by stabilization of consumer income, which also provided a comfortable business environment for FMCG, retail and finance. A firmer oil price would normally help the economy, but we are mindful of downside risks to our 11.5% growth projection for 2018, which include geopolitical uncertainties, the effect of new sanctions, and currency risk. Advertiser demand will be concentrated in video media (TV + online video, often abbreviated to OLV) and in programmatic buying of performance formats (“cost per…,” or CPX). Predicting 2019 is made more hazardous by tough international relationships, though one certainty is it will be a hard comp. We think diplomatic progress could support 7% advertising growth, but we will have to revise this down in the event of any further material damage to consumer income and the domestic economy. Fiscal discipline has put Russia in line for a balanced budget in 2018, and on the cautious assumption of $40 oil. At the time of writing, Brent Crude was trading at $77 with a 52-week low of $44. With GDP this year expected to be the same as in 2014, what Russia needs now is growth. Oil and tax provide at least some headroom for state spending, and wage growth is picking up, but these are not enough. Consumer spending is still too small a proportion of the economy, and private investment growth is among the lowest in the world. Fixing this will involve reform, liberalization and avoiding economic sanctions, which may lie beyond the capacity of Russia’s politics. Media RUBmm TV Radio Newspapers Magazines Out-of-home Cinema Digital 24 23 23 23 416,457MM 464,367MM 495,844MM 6,700MM 7,471MM 7,977MM Media Total USD MMRUB MM 2017 2018f 2019f 170,857 199,603 188,304 18,445 18,083 16,900 7,642 8,045 8,650 11,323 11,554 40,880 44,962 47,131 11,850 1,020 1,102 1,124 192,318 210,576 166,300 199,603199,603 TV Radio Newspapers Magazines Out-of-home Cinema Digital 3.7 2.6 0.3 41.4 9.9 41.0 100 Media Total 1.1 TV Radio Newspapers Magazines Out-of-home Cinema Digital 3.7 2.6 0.3 41.4 9.9 41.0 100 Media Total 1.1 SOURCE: GROUPM SOURCE: GROUPM 2019f % Shares of media
  18. 18. THIS YEAR NEXT YEAR 34 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 35 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR -5.0 -7.0 -2.5 -2.0 8.0 2.0 4.8 10.0 7.0 6.0 2.0 10.2 9.5 15.6 11.5 6.8Media Total YOY% change TV Radio Newspapers Magazines Out-of-home Cinema Digital 2018f 2019f2018f 2019f Russia Russia ■ Top categories: estimated net of discounts and tax, based on Gallup TNS gross ■ Historic media revenue: AKAR/RARA ■ Agency commission: out ■ Discounts from rate card: after ■ Newspaper classified: out ■ VAT 18%: in ■ “Internet display” comprises classic display, video and mobile (all types excluding paid search) SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC SOURCE: GROUPM 10 5 0 -5 -15 -20 -10 Consumer Advertising 15 2012 2013 2015 20172011 2014 2018 20192016 10 5 0 -5 -15 -20 -10 Investment Advertising 15 2012 2013 2015 20172011 2014 2018 20192016 Consumer spending YOY changes adjusted for inflation Investment YOY changes adjusted for inflation YOY% Change 2017 Categories YOY% Change and RUBmm Mobile Services Motor & Auto Media Finance Confectionery Real Estate Foodstuffs Medicines Personal Services & Retail Entertainment 20,00010,000 60,00050,00030,000 40,000 -40% 10% -30% -20% -10% 0% 20% 40% 30% 50% 8.3%AVERAGE Cosmetics & Hygiene
  19. 19. THIS YEAR NEXT YEAR 36 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 37 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 United Kingdom 2017 media investment growth of 6.4% may prove a peak: These new forecasts envisage 6.1% for 2018 and 5.1% for 2019. Pure-play internet growth accelerated from 12% in 2016 to 15% in 2017, though much of this arose from the IAB/ PwC retrospectively revising 2016 down by £193 million. There is, however, no denying digital’s impetus in 2016 and 2017, as advertisers large and small changed up a gear with Facebook. It is easy to justify using more digital in advertising: lots of data, lots of reach, easy to use, and cheap. All true, but no element is exempt from challenge. In particular, the rising tide of data encourages short-termism and specialization: knowing more and more about less and less. There is a risk these become diseconomies. Automation, including AI, must increase to liberate human brains for strategy. We need more technology but fewer technicians. The distinction between digital and other media is now meaningless. According to the Advertising Association, in 2017, digital accounted for 23% of news brands’ advertising revenue. We see this rising to 31% in 2018, assisted by the recent arrival of cross-device, reach-revealing PAMCo, which we believe has the potential to amplify the benefits and versatility of the editorial media concerned. We think this will sustain the emerging improvement in news media’s advertising trajectory. This, plus digital drivers in categories such as radio/audio and out-of-home, contributes to our picture of aggregate advertising investment to “traditional” media stabilizing this year and next, after the Facebook surge of 2016 and 2017. In our forecast, “pure-play internet” is still gaining share, however, rising in 2019 to 60% of what we project will be an advertising economy surpassing £20 billion for the first time. The IAB goes to the trouble of estimating components such as mobile, social and video. We would welcome its estimated subdivisions of large and small advertisers and of the market excluding Google and Facebook. The IAB’s headline growth rate is the largest moving part in the measured advertising economy, but it is becoming progressively less informative to smaller publishers and larger advertisers. We produced this forecast on the eve of GDPR’s arrival in May. Much of its effect and interpretation will take time to emerge. More informed consent and a cleaner supply chain are undoubted benefits, as we discuss in GDPR: Inspiring Consumer Best Practices Beyond the EU. One way to ensure consumers love your brand is to support it properly. However, the financial sector sends warnings of unintended consequences of regulation in the form of heavy automation expense in the cause of compliance rather than productivity, and of compliance forming a barrier to entry, and therefore a barrier to competition and innovation. In its April forecast, the IMF fractionally upgraded its UK growth forecast for 2018, but other signals remain contradictory: car and retail sales falling at the fastest rates for years, while productivity, inward investment and corporate confidence improve. Each monthly review of the bank base rate seems like a toss of the coin. Unemployment is at a 43-year low and workforce participation is at a record high, but it is headline news when wage growth exceeds that of consumer prices. Fuelled by global recovery, the strongest source of new demand is currently exports, which grew three times the rate of GDP in 2017, but evidently at risk of Brexit and protectionist disruption. The prospect of 1.6% real/3.3% nominal GDP growth in 2018 is already unimpressive given the health of external demand. Regarding Brexit, fissiparous UK politics remains incapable of furnishing even a minimum purpose and leadership consistent with the national interest. This seems bound to return to weigh on business and consumer confidence, possibly coinciding with pressure on profits should wage demands escalate unexpectedly. Media GBPmm SOURCE: GROUPM TV Radio Newsbrands Magazine brands Cinema Outdoor Pure-play digital 183 193 198 18,795MM 19,937MM 20,960MM 25,902MM 27,477MM 28,887MM Media Total USD MMGBP MM 2017 2018f 2019f 4,301 4,4614,373 501 477 454 1,514 1,584 1,666 604631676 915 934 960 11,746 12,722 10,599 1,514 21.6 1.0 59.9 4.6 3.1 2.3 7.5100 Media Total TV Radio Newsbrands Magazine brands Cinema Pure-play digital Outdoor 21.3 0.9 60.7 4.6 2.9 2.4 7.2100 Media Total TV Radio Newsbrands Magazine brands Cinema Pure-play digital Out-of-home SOURCE: GROUPM 2019f % Shares of media
  20. 20. THIS YEAR NEXT YEAR 38 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 39 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 -6.7 1.7 -4.2 2.9 -4.4-4.9 2.0 5.0 5.0 2.0 2.8 10.8 8.3 5.2 6.1 5.1Media Total YOY% change TV Radio Newsbrands Magazines OutdoorCinema Pure-play digital 2018f 2019f United Kingdom United Kingdom ■ Historic media: AA, IAB/PwC, GroupM ■ Production costs: out, except for cinema ■ Agency commission: out ■ Discounts from rate card: after ■ Newspaper classified: in ■ Categories: Nielsen ■ “Digital” comprises all forms of advertising on all connected devices ■ In April 2017 the IAB retrospectively increased 2015 digital ad investment by £481m ■ “Pure play” means digital revenue accruing to legacy newsbrands, magazine brands and TV broadcasters is removed from the “digital” line SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC SOURCE: GROUPM Consumer spending YOY changes adjusted for inflation Investment YOY changes adjusted for inflation 10 8 12 6 4 2 0 -2 Consumer Advertising 14 2012 2013 2015 20172011 2014 2018 20192016 12 10 8 6 4 2 -2 0 Investment Advertising 14 2012 2013 2015 20172011 2014 2018 20192016 YOY% Change 2017 Categories YOY% Change and GBPmm 1600140012001000200 800600400 -20% -10% 20% 10% 0% 40% 30% 50% 0%AVERAGE Motors Household FMCG Business & Industrial Retail Food Telecoms Cosmetics & Personal Care Travel & Transport PharmaMedia Drink Computers Clothing & Accessories Mail Order Household Equipment & DIY Government Social Political Organization Electronics, Household Appliances & Tech Entertainment & Leisure Finance
  21. 21. THIS YEAR NEXT YEAR 40 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 41 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR United States We forecast 2018 total market growth at 3.7%, continuing to lag expected nominal GDP growth of 5.3% to reflect the continued pricing and top line growth challenges faced by sectors of the US economy. While good news regarding key economic indicators like home sales and unemployment have increased US consumer confidence, the rise in energy prices and low unemployment have many concerned about increased inflation. Marketers continue to study their investments in traditional media, and have increased their scrutiny of all phases of digital, with a continued emphasis on verification and value. The implementation of the EU’s GDPR (General Data Protection Regulation) has caused several US digital publishers to revise their data sharing and targeting policies, which may put a slight drag on the spending increases in this area. Confidence surveys of CEOs and consumers hit multi-year highs in the first quarter following the Trump administration’s tax cuts and deregulation measures. Real GDP is expected to grow 2.9% in 2018 (5.3% nominal), up from 2.3% in 2017, and sustain something close to this in 2019 before stimulus wears off and tighter money wears on from 2020. Real wage growth of 2.7% is forecast for 2018 and 2019, the highest since Lehman, and accompanying a 17-year low in unemployment. Slack in the labor market remains hard to assess, with the participation rate rising but still three points short of 2000’s 82% peak. Another unknown is at what point debt service will become a headwind to growth, with public and private debt up 51 points to 327% of GDP since Lehman, and the annual budget deficit now on the path to 5% or more. The IMF estimates 20% of US companies will struggle even with moderate tightening. Those with the headroom to invest will be encouraged by the tax and relief changes, making it more likely 2018 will sustain 2017’s 4% rate of real growth in investment, up from 1% in 2016. 3.42.2 4.9 40.0 9.6 39.9 100 Media Total TV Radio Newspapers Magazines Out-of-home Digital SOURCE: GROUPM 4.2 2.4 6.2 33.1 10.9 43.3 100 Media Total TV Radio Newspapers Magazines Out-of-home Digital SOURCE: GROUPM Media USDmm TV Radio Newspapers Magazines Out-of-home Digital 4,386 4,298 4,384 188,002MM 194,920MM 199,223MM Media Total USD MM 2017 2018f 2019f 77,163 79,44879,092 6,824 6,893 7,106 9,699 10,898 12,555 19,119 20,339 20,968 65,824 73,400 79,750 2019f % Shares of media
  22. 22. THIS YEAR NEXT YEAR 42 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 THIS YEAR NEXT YEAR 43 | WORLDWIDE MEDIA AND MARKETING FORECASTS JUNE 2018 United States United States ■ Categories: Kantar ■ Historic media revenue: Kantar, GroupM ■ Agency commission: out ■ Discounts from rate card: before ■ Newspaper classified: in ■ Internet classified: out SOURCE: GROUPM/HSBC SOURCE: GROUPM/HSBC SOURCE: GROUPM Consumer spending YOY changes adjusted for inflation Investment YOY changes adjusted for inflation 6.0 4.0 2.0 0 -2.0 Consumer Advertising 8.0 2012 2013 2015 20172011 2014 2018 20192016 Investment Advertising 6.0 4.0 2.0 0 -2.0 8.0 10.0 2012 2013 2015 20172011 2014 2018 20192016 YOY% Change 2017 Categories YOY% Change and USDmm 20,00015,00010,0005,0000 -14% -16% -10% -12% -2% -4% -6% -8% 0% -7%AVERAGE Automotive Total Retail Misc. Services & Amusements Media & Advertising Medicines & Proprietary Remedies CommunicationsInsurance & Real Estate Restaurants Public Transportation, Hotels & Resorts Financial 2.5 0.4 -11.0 -13.2 -3.0 -3.0 -2.0 -1.0 -6.0 2.0 8.7 11.5 3.7Media Total YOY% change TV Radio Newspapers Magazines Out-of-home Digital 2018f 2019f 2.5 0.4 -11.0 -13.2 -3.0 -3.0 -2.0 -1.0 -6.0 2.0 8.7 11.5 3.7 2.2Media Total YOY% change TV Radio Newspapers Magazines Out-of-home Digital 2018f 2019f
  23. 23. GroupM is the leading global media investment management company for WPP’s media agencies including Mindshare, MediaCom, Wavemaker, Essence and m/SIX, and the outcomes-driven programmatic audience company, Xaxis. Responsible for more than US $108B in annual media investment by some of the world’s largest advertisers, GroupM agencies deliver an advantage to clients with unrivaled insights into media marketplaces and consumer audiences. GroupM enables its agencies and clients with trading expertise, data, technology and an array of specialty services including addressable TV, content and sports. GroupM works closely with WPP’s data investment management group, Kantar. GroupM delivers unrivaled marketplace advantage to its clients, stakeholders and people. Discover more about GroupM at www.groupm.com. For further information about this report, please contact adam.smith@groupm.com GroupM 498 7th Avenue New York, NY 10018 U.S. A WPP Company

×